While the new British government opposed the draft compromise text on alternative investment fund managers agreed to on Tuesday by EU finance ministers, a number of EU member states, including Malta, have expressed concern over the agreement, which now has to be negotiated with the European Parliament.
The main bone of contention among member states on this directive concerned a clause which would bring in different rules for home-grown and foreign fund managers.
While EU managers would get the automatic right to market their funds across the bloc after having registered in one EU country (known as the passport), foreign managers would have to re-register in every member state in which they want to do business.
At the end of the ECOFIN Council, the current Spanish EU presidency - without the support of the UK, which is home to 80 per cent of the bloc's hedge funds - announced that it had gained a mandate to go into talks with the European Parliament on the dossier.
The agreement came the day after the European Parliament's Committee on Economic and Monetary Affairs agreed on similarly stringent rules of its own, based on the draft directive brought out by the Commission last April.
The proposal aims to regulate all alternative investments, including hedge funds, private equity, commodity and real estate funds, but the hedge funds industry has been singled out for particular attention. While hedge funds are not entirely blamed for the uncertainty that has plagued financial markets over the last three years, EU member states said in a statement after the deal that "their activities may also serve to spread or amplify risks through the financial system".
According to Malta, the current text still places some difficulties for the island as it leads to a situation of uncertainty with regards to the "passport" issue.
Ireland, France and Austria also highlighted concerns about other measures in the draft, while the Czech Republic was the only country that shared Britain's position on foreign managers.
On his part, the new UK Chancellor of the Exchequer George Osborne still managed to secure a statement in the minutes of the meeting highlighting "concerns expressed by some member states on certain aspects of the presidency's proposed general approach".
Following the compromise deal reached by finance ministers, negotiations on the dossier will now enter their most crucial stage with discussions between Parliament, Council and Commission trying to hammer out a common stance ahead of Parliament's plenary vote in July.
The European Commission is keen to seal a deal on the directive before the end of the year.